China Consumer (H/A): Positioning reset: flows and beyond

Research evidence excerpt

China Consumer (H/A): Positioning reset: flows and beyond

Low base – key debates

Four China consumer downcycles since 1980s

Based on our historical framework for China consumer cycles, the sector is now in its

fourth major downcycle since the 1980s. We divide China’s reform and opening-up era

into five major consumer phases, with each transition historically marked by a major

downcycle. These downcycles have tended to last around four years on average. The

current consumer downcycle, which began with the Shanghai lockdown in early 2022,

has already lasted 4+ years.

Exhibit 7: Each major China consumer downcycle has generally lasted around four years

China: four major consumer downcycles

Source: BofA Global Research

BofA GLOBAL RESEARCH

Why current downcycle lasting so long?

We attribute the current China consumption weakness to both cyclical and structural

reasons.

• Cyclical factors. We see cyclical headwinds from China’s property market slump

(with property accounting for ~50% of household wealth and average home prices -

40% since 2021), lack of government stimulus, as well as a weak job market and low

business confidence across many sectors, leading to job cuts and tighter control

over expenses and capex.

• Structural factors. We also see structural challenges stemming from already high

per-capita consumption across most consumer goods categories (partly supported

by China’s vast and sophisticated supply chain and low prices), as well as constant

channel and media innovation/disruption and an aging population. These factors are

compounding cyclical pressures and prolonging the current downcycle. For further

details, please refer to our sector note “Is China still under-consuming? Myth vs.

Truth”, dated 24 Nov 2025.

Post-CNY weakness